MIKE SEXTON, REPORTER: Every year thousands of punters head to Birdsville in Outback Queensland for the annual races. Perhaps few would be aware though their tinnies are being kept on ice in part thanks to electricity generated from scolding hot water coming from deep beneath the desert floor.

CHRIS SMITH, ERGON ENERGY: The water comes up from the Artesian Basin at 98 degrees Celsius. The water then passes through a gas field heat exchanger which heats the gas and pressurises it and then it goes through a turbine and produces electricity.

MIKE SEXTON: The engineering's relatively simple and the outcome is emission-free power 24 hours per day that doesn't rely on the wind blowing or the sun shining.

CHRIS SMITH: The plant at Birdsville was custom-made when it was done, so it's done quite some time ago. But technology's changed now and there's - this sort of plant is readily available and is being used throughout the world.

MIKE SEXTON: This is just one form of what's known as geothermal energy where the heat stored in subterranean rock formations is harnessed to generate electricity. Although the Birdsville plant is tiny, the geothermal potential in Australia is huge.

SUSAN JEANES, AUST. GEOTHERMAL ENERGY ASSN: The resource is vast. If we mined just one per cent of the national - the nation's geothermal heat, in the top five kilometres of the crust we could make 26,000 times Australia's annual energy supply. So there's no limitation on the resource.

MIKE SEXTON: Given the need for clean baseload power and the size of the resource, it's no surprise that more than 50 geothermal licences have been issued in Australia. One of the more advanced is Petratherm, which has drilled shafts into hot rocks at Paralana in outback South Australia. The next step is to pump water down which converts to steam which is then used to drive turbines.

TERRY KALLIS, CEO, PETRATHERM: We estimate at Paralana alone we could produce 13,000 megawatts of power. Now that's about four times the power requirement of South Australia.

MIKE SEXTON: Excitement about the potential initially attracted investors prepared to take a risk on a new industry. But drilling wells hundreds of metres into granite in remote locations is a difficult and expensive business, and after years of promise, the industry has delivered only modest results. That, coupled with the GFC, has seen investors turning their backs on geothermal companies.